Why good insurers are modernizing their mainframe now | Insurance coverage Weblog

In a market that calls on insurers to be agile and digitize at scale, an insurer’s mainframe can both catalyze or inhibit progress. Whereas the mainframe was as soon as a beneficial core technological perform, many legacy mainframes lack the agility to fulfill the calls for of buyer expectations and speedy digital progress.

The decision for mainframe modernization

Insurers need to attain a digital end-state and embed the enabling capabilities they should carry out within the cloud utilizing a route that’s quicker, higher, and cheaper. Modernizing the mainframe is the final mile in the direction of enabling enterprise capabilities, reimagining the enterprise and driving a cloud working mannequin.

If we have a look at the market forces shaping the broader trade, insurers are being known as upon to be extra agile in order to maintain tempo with quickly altering calls for. This is because of a variety of things, from greater inflationary setting bills for insurance coverage operations and growing claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest price setting and future predicted volatility, prices want to come back down, and one of many prices that’s growing 12 months over 12 months is upkeep of the mainframe.

Zooming in on sectors inside insurance coverage, this want for agility is manifested in several methods. Property and Casualty (P&C) insurers not solely should be extra agile, however must concentrate on advertising factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement trade will profit from unlocking distribution, a feat which is presently not potential as a result of a number of that logic is embedded within the mainframe. Subsequently, the main focus is on modernizing the mainframe to allow digital channels. Group and Retirement insurers are present process a compressed transformation – which means that the sector requires reimagined operations from the bottom up with a view to enhance buyer relationships and achieve a aggressive benefit – with Group hurting on margins, and Retirement hurting on margins and scale. Lastly, Group and Well being insurers are being challenged to drive down the fee foundation, and drive development, for instance, by including a wellness layer to their providing.

From a value perspective, the case for mainframe modernization is evident.  The demand positioned on the insurance coverage infrastructure is growing, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an influence on expertise, as devoted employees will likely be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe is not only about total agility, however securing a basis for essential technological transformation. In a latest report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative expertise and significant differentiator within the insurance coverage trade when utilized in tandem with people. Nevertheless, AI transformation just isn’t potential if an insurer has not dismantled and up to date mainframe platforms first.

Mainframe modernization outcomes

Modernizing the mainframe provides some compelling advantages. By operating in a cheaper setting, working prices are drastically lowered, and using a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 % discount in working bills. Whereas this financial savings is critical, it’s not the one profit. Most significantly, mainframe modernization – by way of agility, flexibility and entry to essential mainframe knowledge – has a robust influence on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are capable of leverage their mainframe knowledge, which may comprise many years of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog publish additionally illustrates the essential position the modernization of the mainframe performs in closing the talents hole – it may counter the issue many firms are going through as their mainframe consultants attain retirement age and can even entice new expertise excited about modernizing core enterprise workloads.

Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and along side interoperable functions, guarantees as much as 5 instances deployment speeds. New enterprise capabilities resembling the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages may be caused by conservative changes, or a whole system transformation. All of it is determined by the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization just isn’t a one-size-fits-all proposition. It’s pushed by the distinctive market wants of the insurer and the strategic intent of the enterprise. There’s a broad spectrum of decisions obtainable to modernize at a tempo that’s snug and obligatory for the insurer. Immediately’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise contains SaaS options, Cloud maturity and advances in migration applied sciences.

By way of approaches, insurers can roll out the next interventions, which all range in scale and depth:

  • Re-platform: Migrating an utility with out altering the programming language to a different platform / Working System
  • Re-factor: Harnessing Accenture’s language migration toolkit to remodel from legacy to fashionable programming language code, utilizing (semi) automated tooling to mitigate danger regarding legacy expertise, enhance agility and scale back prices
  • Substitute: Figuring out a managed service/utility that may present required performance, together with extracting and migrating knowledge to a brand new system to scale back complexity and prices
  • Reimagine: Reimagining the enterprise totally with rewritten and rationalized functions

How insurance coverage firms can start their mainframe modernization journey

There are nuances to how mainframe modernization is utilized inside insurance coverage. These options differ in depth from enterprise advantages to the expertise used. The appliance is determined by whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/small business and enormous business. Nevertheless, there are three key steps that decide the route of each mainframe modernization journey:

  1. Defining enterprise priorities
      • a. What are the best priorities for the enterprise?
      • b. How do these align to the important thing issues attributable to operating on the mainframe?
  1. Figuring out finances constraints
      • a. What’s the finances obtainable as we speak?
      • b. What’s the length obtainable to appreciate ROI?
  1. Figuring out capability for transformation
      • a. What’s the IT staff’s capability for transformation?
      • b. Are there assets obtainable?
      • c. Is there a number of different change occurring?

Following this course of leads to a novel mainframe modernization plan.

Accenture’s insurance coverage mainframe modernization methodology will enable you to develop a journey aligned along with your targets. Contact us to get began.

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Disclaimer: This content material is offered for common data functions and isn’t meant for use instead of session with our skilled advisors.
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